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HMSP

Contact our analyst Eka
Hold, 11% upside
4th November 2021
​Price Rp 1,000

Target price Rp 1,105
Positive Sales Growth
  • With higher volume in 3Q2021, HMSP’s sales increased +8% YoY or 3.4% QoQ  to IDR 24.87 trillion. In 9M2021, sales increased 7% YoY to IDR 72.5 trillion.
  • Export sales improved with 23% YoY growth but are still below earlier quarters as the global market remains challenging.
  • HMSP maintained positive-growth for domestic sales with +8% YoY growth to IDR 24.8 trillion in 3Q2021.
  • Machine-Made Kretek (SKM) had the fastest growth of 10% YoY to IDR 16.3 trillion in 3Q2021. Hand-rolled Kretek  (SKT) sales grew a small +0.6% YoY but were higher by 12.5% QoQ to IDR 5.89 trillion and Machine-Made White (SPM) increased +4.2% to IDR 2.32 trillion.
  • The sales volume growth continues in 3Q202, and we expect more growth in the next quarters inline with a recovery in domestic consumption. 

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3Q2021: Margin downtrend
  • HMSP margins continue to decrease QoQ. The increases in excise tax and the government plans to increase excise tax next year are still weighing on the sector.
  • Despite single-digit-growth in sales in 3Q2021, HMSP net profit decreased by -30% YoY or -8% QoQ to IDR 1.42 trillion. As a result, HMSP net profit margin declined to 6% from 11% in 1Q2021.
  • For 9M2021, net profit declined by -20% YoY to IDR 5.55 trillion.
  • HMSP’s cost of sales increased +13% YoY or +3.5% QoQ to IDR 20.9 trillion in 3Q2021. This resulted in a lower gross profit -13.2% YoY to IDR 3.89 trillion with a lower gross profit margin of 16% from 20%.
  • Profit before tax decreased by -30% YoY to IDR 1.8 trillion.
  • With the recovery in sales volume, we expect HMSP’s sales will grow +7% YoY to reach IDR 99 trillion.
  • However with negative sentiment from higher excise tax and no improvement in margins, we expect a lower net profit -14% of IDR 7.42 trillion.
Valuation: TP 1,105 HOLD
  • We are targeting HMSP to trade at a 16x 2022F PE within a year. Target Price is IDR  1,105 which represents 11% upside. Our recommendation is HOLD.
Read the full report
Previously
​HMSP Aug2021
PT. Binaartha Sekuritas

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